Tax, Reputations and Responsibility: Where are you on the 'Tax Map'?

Published by
Corporate Citizenship

Thursday 16 August 2012

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Campaign groups, the media and politicians have seized on tax as a topical issue in tough economic times. Multinationals face increased scrutiny over how much tax they pay and where. But most businesses have failed to articulate their position effectively.

Research by Corporate Citizenship, the specialist global corporate responsibility and sustainability consultancy, has identified the different types of tax policy and the implications of this debate for businesses. It includes:

a “Tax Map” categorising the six different approaches to tax ranging from “risking evasion” to “principled obligation” - where companies effectively pay more tax than the legally permissible minimum for ethical, principled or political reasons;

an explanation of how tax has shot up the agenda and a look at the different sides of the debate;

examples of how companies such as British American Tobacco, McDonald’s and ExxonMobil have embraced new approaches to tax;

the steps companies need to go through to understand their position on tax and communicate it effectively to the outside world.

The research draws on the insights gained through our work with clients around the world. Many companies are facing challenging questions about tax. We believe it has become a significant issue in terms of responsible business practices and one that is not going to go away.

“Companies need to think about a new approach to managing and communicating tax effectively. This doesn’t necessarily mean companies paying more tax – but it does mean companies identifying a coherent and credible position on tax, and finding simple language to defend it in.

“Businesses with a reputation to defend will need to explain how they are paying the right amount of tax, consistently and in the right places, and that this is in the long-term interests of both their shareholders and society.